Sunrun has agreed to acquire Vivint Solar in an all-stock transaction. The deal is valued at US$3.2 billion including debt. Commenting on the deal, Ravi Manghani, Wood Mackenzie Research Director, said: “Per Wood Mackenzie’s US PV Leaderboard, Sunrun and Vivint have been the number 1 and number 2 residential solar companies in the US for the past few years. Sunrun holds about 9% of the market share and Vivint is right behind at 7 - 8%. Without assuming any erosion or gains in market share, the combined entity will represent about 15+% of overall market share.
“This acquisition, paired with Tesla’s announcement last week to provide some of the cheapest residential solar offerings, indicates that the market is longing for cost efficiencies. With the impending ITC step-down, the next frontier of residential solar market plays will have to be on the cost side. Sunrun has made a move to gain a cost advantage through this acquisition.”
Austin Perea, Wood Mackenzie Senior Research Analyst, added: “Sunrun’s acquisition of Vivint Solar will nearly double its market share and represents the largest consolidation in residential solar history. In the near-term, Sunrun will realise millions of dollars in vital cost synergies that accompany scale. These efficiencies will become increasingly important in a cost-competitive industry.
“But the long-term accretive nature of the acquisition is still in question. Sunrun cites Vivint’s direct-to-home sales channel as complementary to Sunrun’s platform. But the industry has been moving away from door-to-door sales for years, in part due to the high cost of this sales channel. While Vivint has been successful in that space to-date, it’s counterintuitive to envision door-to-door sales as a long-term growth engine, especially as customer education continues to improve and installers – including Vivint – have increasingly moved to digital sales platforms and away from door-to-door sales during the coronavirus pandemic.
“On the other hand, the biggest driver for reducing the cost of customer acquisition in the long-run may just be pure brand equity and household recognition. With Sunrun’s market share expanding considerably with Vivint’s acquisition, becoming the juggernaut of residential solar may be the key to long-term growth.”
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